Earlier this month the Montana Commissioner of Securities sued Securities America and some of its executives over the sale of Medical Capital, a failed private placement accused of being a Ponzi scheme. Montana is the second state to sue Securities America on its sale of these risky and speculative investments. See Massachusetts Securities Regulators Have Sued Securities America, Inc. for Securities Fraud.
According to the Montana Order, Securities America was the placement agent for the sale of Medical Capital and sold nearly 40% of the total Medical Capital notes nationwide since 2003, amounting to a total of $697 million. The Order alleges that due diligence analyst reports were issued each year warning Securities America about a number of material risks concerning the Medical Capital investments and “strongly recommended” that investors be provided with a disclosure of those risks. According to the Order, “Securities America concealed these risks” and “withheld material information regarding heightened risks associated with the [Medical Capital] promissory notes” from its brokers and clients. These risks included Medical Capital’s lack of audited financials.
Medical Capital claimed to provide financing to healthcare providers by purchasing the providers’ accounts receivables and making loans to those providers. The accounts receivables then allegedly were packaged into notes and sold through private placements to investors. Approximately 20,000 investors purchased $2.2 billion in Medical Capital investments, including hundreds or thousands of Securities America customers. Securities America had approved the Medical Capital notes for sale by its brokers to Securities America customers.
Blum Law Group is a nationally recognized law firm with extensive experience representing investors throughout the United States and Latin America in investment fraud and stockbroker fraud cases involving stocks, bonds, options, private placements, Regulation D offerings, principal protected notes, structured products, and hedge funds. Blum & Silver currently represents numerous Medical Capital investors who have lost tens of millions of dollars. The firms’ clients invested in Medical Capital notes with the expectation that their principal was safe, and they never were informed of the fraudulent nature of the investments. If you suffered Medical Capital investment losses, please contact us.